Modeling the Impact of Taxes on Petroleum Exploration and Development

November 27, 2012

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

We present a simple model of petroleum exploration and development that can be applied to study the performance of alternative tax systems and identify potential distortions. Although the model is a highly simplified, it incorporates many factors and some of the key tradeoffs that would influence an investor’s investment behavior. The model recognizes the role of enhanced oil recovery and treats the impact of taxation on exploration and development in an integrated manner consistent with an investor’s joint optimization of investments at both stages of the process. The model is simple and user-friendly, which facilitates application to a broad range of problems.

Subject: Commodities, Corporate income tax, Marginal effective tax rate, Oil, Oil prices, Prices, Production sharing, Tax policy, Taxes

Keywords: cash flow, Corporate income tax, distortions, economic value, fiscal regime, IOC NPV, IOC place, IOC's profit, Marginal effective tax rate, Middle East, net present value, Oil, oil price, Oil prices, oil production, petroleum exploration, price movement, Production sharing, taxation, WP

Pages:
46
Volume:
2012
DOI:
https://doi.org/10.5089/9781557754455.001
Issue:
278
Series:
Working Paper No. 2012/278
Stock No:
WPIEA2012278
ISBN:
9781557754455
ISSN:
1018-5941

Loading component...

IMF’s Work

RESOURCES

TOPICS

Flagship Publications

Other Publications

IMF reports and publications by country

Regional Offices

All News

See Also

For Journalists

Press Center

RESOURCES

FLAGSHIPS

KEY SERIES

IMF NOTES

Loading component...

IMF Working Papers